Living in a mortgage-free or loan-free home can be a blessing if you are the owner of the house and can sell, refurbish, and do a lot with the property. If you buy a home with the cash, you immediately own it, but if you buy the house on mortgage, you are liable to pay a certain amount annually or monthly. Buying a property in cash also means that at the end of the deal, you will be left with a low bank balance but a house of your own. Now, let us look at whether it is wise enough to buy a house in cash or home loan:
Buy a House in Cash
No Interest: Buying a house in cash means you do not have to pay any interest that would otherwise accrue from a home loan.
Quick Turnaround Time: As you pay in cash, you can expect the seal the deal as soon as possible. There is hardly a waiting time in cash payment.
You are Owner: Buying a property in cash makes you the immediate owner.
Keep Income Secret: You don’t have to disclose the income when buying an asset in cash. Mortgage lenders, however, require you to show a certain amount of income.
Reduced Liquidity: Paying in cash can you leave with the least money in the bank. Houses and assets can be way expensive to buy in cash.
Buy a House By Loan
Tax Benefits: Taxpayers in the US can subtract the interest paid on initial and following home loans up to $1,000,000 in mortgage arrears.
Qualify for a Mortgage: Prospective buyers are required to qualify for the loan. They will have to show income proof as well as their bank balance if needed for the mortgage lenders.
Time Consuming: Applying for a mortgage and buying a property on loan can be time-consuming. Lenders ask for a range of financial documents and scrutinize the application on various parameters. During the time of screening, the lenders may choose to turn down any form if it fails to meet the requirement.
Whether you are building a custom home or buying a spec home, you have a choice whether to buy by cash or through loan. Buying a home on loan is a wise choice if you have a stable income. Try to pay off the loan at the earliest and enjoy the ownership of the newly purchased property.